Robinson can breathe as Kagara changes on track

Ask Kim Robinson what lessons he has learnt from a global financial crisis that almost caused the collapse of his base metals miner Kagara, and the 58-year-old is uncertain.

"What happened over the last nine months or so is something that nobody has ever experienced before," he says.

"So I don't know that you can actually learn too much about what's happened, it's an experience nobody really wants to go through.

"And Kagara wasn't an orphan in that regard. But I guess you learn that if you want to remain in business you have to get involved in some pretty fancy footwork."

For now, at least, Robinson can afford to give his feet a rest.

Kagara is back from the brink, courtesy of a $226 million capital raising that ensured the miner's survival but also more than doubled its issued capital base.

Kagara has survived arguably the worst conditions for mining companies since the Great Depression and has done so with its asset base intact at a time when many peers have succumbed to quasi-takeovers by cashed-up Chinese groups.

But it was a very different story a little over two months ago, when Mr Robinson confirmed investors' worst fears that the collapse in copper and zinc prices, not to mention the sharemarket rout suffered by all mining companies, had pushed Kagara to the brink.

On March 31 Kagara had $2.7 million in cash left, a $19.3 million provisional pricing charge, $142 million of $150 million worth of National Australia Bank facilities drawn down, and a $50 million Westpac line of credit used. And its share price collapsed.

Mr Robinson denies Kagara almost appointed administrators but concedes it was "a most unusual position".

"When you are a public company there's always ways to work through these issues, it's just hard work," he says. "We've had a great deal of support from our shareholders and our offtake partners, like Transaminvest."

The support was needed, given Kagara's near-doomed state.

Mr Robinson was one of Kagara's biggest shareholders, with a stake of about 8 per cent, and personally felt the pain the miner was going through. He had to sell some Kagara stock as well as other investments to come up with the $10 million he needed to take up most of his rights in the entitlements issue.

Having completed a global roadshow, Mr Robinson says the best markets for Kagara to tap proved to be Hong Kong - with its links to investors in mainland China - and Switzerland, "which has been a very good hunting ground for us and it's an area that has been overlooked a bit by corporate Australia".

Another building block fell into place when Kagara was approached by advisers acting for Guangdong Foreign Trade Group, a Chinese group looking to invest in the Australian mining sector.

Kagara had until then avoided the clutches of Chinese investors, despite its base metals focus, but agreed to a deal that would see Guangdong become a cornerstone shareholder with one board seat.

The introduction of Guangdong as a 15 per cent investor, in return for a $57 million cash injection, has cut Mr Robinson's stake in the group he co-founded 28 years ago to about 5 per cent. "Clearly I'd like to have more," he says.

But Kagara's balance sheet is now fixed and drawn-down debt reduced from $150 million to about $60 million. There is enough working capital left for Kagara not to have to rush the spin-off of its gold assets, Mungana Goldmines, while its Lounge Lizard nickel joint venture with Western Areas is approaching first production.

And a pre-feasibility study for what could become Kagara's defining project, Admiral Bay in the Kimberley, is under way.

"We have always been confident we can work our way through this and it's proven the case. But there has been a bit of work involved," he says with a laugh.